FAQ's

Are credit cards for business purposes the right solution

When you own your own business, keeping an eye on expenditure can be the key to staying open. A business credit card can be an essential tool in the business, helping you to manage cash flow and get through difficult weeks when little money is coming in. They can also be useful for handling expenses for sales teams, or staff going on company trips, particularly as they don't require expenses to be worked out and paid to individuals at the end of the month. Instead, only the credit card will need to be reimbursed. Credit cards can be very useful to businesses, but they can also be a handful for small companies who need to keep an extra-tight rein on their costs. Understanding the pros and cons of business credit cards can help you to decide whether your company really needs one.

What are the advantages of a business credit card?

For a business, one of the biggest advantages of a credit card is that you don't have to wait for invoices to be paid, or for money to clear an account, before stock can be purchased. When you pay a credit card in full, you have at least 30 days to pay off the next month's worth of spending, so you don't have to deal with your credit card expenses as they occur. This can speed up business deals, and also help you to spread your business costs over a month-long period.

Many business credit cards also have the advantages of high limits on spending, so you can buy more with the card. As long as you can pay this back, you can spend as much as you like. Many business credit cards also have periods of interest-free credit, so you won't lose anything more with your bills. You can also potentially use the higher credit limit to keep your business running during dry periods, because as long as you know that money will come in at the end of the month, you won't have to repay all of the credit card loan in one month.

With a credit card, rather than a cash card, you can also buy items that you need online, including from overseas stores that may be able to supply you with items that you can't buy in the UK. This can help you to bring in items of interest to your clients, and ensure that you can expand your business. Credit cards are also a better way to buy your goods even in the UK, and can be an alternative to using your cheque book.

What are the disadvantages of using a business credit card?

Like all forms of credit, a business credit card has its downsides. These are particularly focused on the amount of money that you need, and whether you will be able to repay everything you owe within the time period required by the credit card. For example, the APR of a business credit card can rise enormously once the interest-free period reaches an end. You may also find yourself tempted to spend money when there is no guarantee of invoices being paid within the next 4 weeks. This can place you in debt, and may result in your business getting a negative credit score if the business fails to pay back what it owes.